Apex chambers against hostile takeovers

NEW DELHI, OCT. 16. The Associated Chambers of Commerce and Industry (Assocham) today asked financial institutions to support the existing "good management" and not to fund hostile takeovers.

Referring to the controversy over the alleged hostile takeover bid in the case of Mr. Arun Kumar Bajoria-Bombay Dyeing, the Assocham advocated a review of the existing takeover code.

Today a raider can keep acquiring shares up to 15 per cent of a company's equity without having to make an open offer, whereas a promoter can raise his holding in his own company by only five per cent every year through the creeping acquisition route, this is unfair," the Assocham President, Mr. Shekhar Bajaj, said in a statement.

The chamber suggested that a promoter should be allowed to raise holdings at his own pace up to 51 per cent without any annual ceilings.

Another apex body, the Federation of Indian Chambers of Commerce and Industry (FICCI), said "what is important is to identify whether Mr. Bajoria's purchases were in conformity with the takeover code.''

``In case it is, and Mr. Bajoria has followed the Securities and Exchange Board of India rules, then the current law cannot be put aside," the FICCI said in a statement.

The FICCI, however, also maintained that a culture of hostile takeovers should not be encouraged in India simply for the reason that promoters, who were long term investors need to be encouraged in order to increase investment and hasten growth.

``Existing rules and guidelines of SEBI cannot be set aside while judging the claims of Mr. Bajoria. At the same time an atmosphere of hostile takeovers should not be encouraged," the FICCI President, Mr. G. P. Goenka, said.

Five per cent creeping acquisition by the promoter did not provide for a level playing field against corporate raiders, Mr. Goenka said adding that financial institutions should not disrupt existing managements.

- PTI

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Section  : Business
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